special servicers. This past December,
Berkadia Commercial Mortgage rose from
the ashes of the former Capmark Finance’s
servicing and mortgage banking businesses. It was acquired by a joint venture of
Berkshire Hathaway Inc. and Leucadia
National Corp. for at least $490 million.

In March, Centerline Capital Group
sold its special servicing and real estate
debt fund management arm to Andrew
Farkas’ Island Capital Group LLC for $110
million. The price tag included $50 million in cash and $60 million in assumed
senior debt. The Related Cos., which is
controlled by the former chairman of
Centerline’s board of trustees, Stephen M.
Ross, assumed $5 million of the pre-trans-action debt. A portion of the sale proceeds
were also used to pay off about $116.3 million of unsecured debt.

Most recently, LNR Partners, the largest
special servicer with a $191-billion portfolio
as of Dec. 30, 2009, took itself out of the running as an acquisition target. It announced a
recap in June, launching a $400-million
equity-rights offering and also engaging
Goldman Sachs and Bank of America Merrill
Lynch as lead arrangers on a $445-million
senior secured loan.—Paul Bubny

Executive Moves

NEW YORK CITY—Leaving a post at Cushman& Wakefield, Klaus Kretschmann hasjoined Alvarez & Marsal as a managingdirector and member of the executivecommittee of Alvarez & Marsal Real EstateAdvisory Services. He will serve as nationalpractice leader for the firm’s distressedreal estate and receivership services and asits Northeast real estate market leader.

For the latest news on executive
hires, moves and promotions, visit
www.globest.com/executivewatch.

Is NYC’s Campaign Finance Reform Unconstitutional?

New York City enacted Local Law 34 in 2007 to establish a more
stringent campaign-finance law. LL34 prohibits limited liability
companies, limited liability partnerships and traditional partnerships from making corporate contributions to political candidates. In addition, LL34 drastically lowered the contribution limits for those “having business dealings with the city.” For example,
the maximum contribution to a candidate for a citywide office—
mayor, comptroller, public advocate—is
$4,950. For those “having business dealings
with the city,” the maximum contribution is
$400. Lastly, LL34
exempts municipal unions from
the definition of “having business dealings
with the city.” Contributions from political-action committees are still permitted.

In meetings with legislators, the Real
Estate Board of New York argued that it was unreasonable and
inequitable to exempt municipal unions. In effect, LL34 drastically curtailed the private sector’s ability to make campaign
contributions while allowing labor unions an unfettered ability
to support candidates that they would later lobby for legislation
beneficial to their interests. In addition, it failed to address the
substantial benefit that candidates derive from campaign workers provided by organized labor on Election Day.

After passage of this law, REBNY supported a lawsuit (Ognibeneet. al. v. Parkes) that challenged the constitutionality of LL34. Thelawsuit raised several claims of action summarized below:• In banning corporate contributions, the US SupremeCourt had reasoned that the state created advantages thatallowed corporations to build capital and to be successful inthe economic marketplace. These advantages that the state

By Steven Spinola

granted to corporations should not be parlayed into success
in the political arena.

• The Supreme Court has allowed limits on campaign contributions for only one reason, namely to prohibit large contributions that could give rise to corruption. New York City’s
campaign-contribution limits are not unusually large and not
large enough to lead to corruption.

• The remaining claims in the lawsuit point out the difficulty
that non-incumbent candidates would have raising funds for an
effective campaign, ask the court to revisit the prohibition of
campaign contributions by corporations and maintain that the
city was required by the Voting Rights Act to receive clearance
before making changes in its election system.

REBNY supported this lawsuit because we strongly believe
that the business community should have the same rights to
affect the political process as those given to organized labor or
any other interest group.

Recently, Judge Laura Taylor Swain, US District Court,
Southern District granted a motion by the city for a summary
judgment against the plaintiffs in this case. However, that decision has been appealed to the Second Circuit of the US Court of
Appeals. The case against LL34 will be argued on Oct. 18.

We were encouraged by the recent Supreme Court decision
in Citizens United v. Federal Election Commission that corporations
have the same rights as individuals to engage in independent free
speech, effectively eliminating the restriction on corporate campaign contributions. We hope that the logic of that case will be
applied to the pending appeal.

Steven Spinola is president of the Real Estate Board of New York. He
may be contacted at sspinola@rebny.com. The views expressed here are
the author’s own.